The Jewish Ethicist: Unequal Partnership

A partnership is all for one and one for all.

Q. When my friend and I began our partnership I anticipated our contributions would be about equal. But now I see that despite all the efforts of my partner, it is my abilities that are really responsible for our business success. Am I entitled to a larger share of the profits?

A. Partnerships are a most practical and durable form of business relationship. They have persisted in little-modified form since ancient times. When two people work together, they share risk and knowledge and take advantage of specialized abilities. The Talmud has a concise expression of the advantage of working in tandem. When explaining why a partner is not allowed to unilaterally break off the relationship before the stipulated time, even if he is willing to share in any losses, the sage Rava states succinctly: "The luck of two is better." (1)

While partnerships were known in the era of the Talmud, in later times and in particular with the flourishing of Jewish commerce in medieval times they became an immensely popular arrangement, and in the responsa literature we find a very highly developed legal theory of partnerships. One principle we find consistently is that in the absence of any explicit agreement, the assumption is that profits are shared equally. Thus we find in the Talmud:

Shmuel stated: Two people who mingled funds [for a business – even] if one invested one hundred and the other two hundred, the profits are shared equally. (2)

The business logic behind Shmuel's statement is that in most partnerships the efforts of the partners are a much more important contributor to success than the amount of money initially invested, so unless there is an explicit stipulation to the opposite we should assume that the intention was to split profits equally.

Naturally that doesn't mean that one partner can shirk and leisurely share in the profits of his hard-working partner. One of the great medieval authorities, the Rashba (Rabbi Shlomo ben Adret) writes that if a partner contributes only minimal efforts, this is considered a fundamental breach of the partnership agreement, and the partner is not entitled to a share of the profits. He is at most entitled to a modest salary for his efforts. (3) The opposite can also happen: if one partner invests efforts or resources that are clearly above and beyond what is called for in the agreement, he may be entitled to extra payment, in the form of salary or reimbursement, for his efforts. But he does not get an enlarged share of profits.

What all of these sources have in common is that the presumption of equal share of profits is a nearly unshakeable one, as long as there is no breach of the agreement. Even if the contributions are unequal, in money or in effort, they are either ignored or dealt with outside of the profit-sharing arrangement.

The situation you describe is common and perhaps even the norm in new businesses. When a business is founded, no one knows where the winds of commerce will blow. Who could have known, when Apple Computer was founded by two friends that in the future being a brilliant programmer and engineer like Stephen Wozniak would become virtually a standardized input, whereas being able to imagine the future of the market would become the main source of profitability? In other industries the opposite happened: the market went to people who could respond to the market with solidly designed products, not those who could anticipate the market. When you and your partner went into business together, you in effect purchased equal shares of stock; your increased contribution cannot change that reality.

On the other hand, if you really believe that your contribution is the key to your business' success, then you have the right to go off on your own. Assuming you didn't define a specific term for your partnership, it can be broken off at any time. Of course dissolving a partnership can be a complex matter; when there is a going concern typically one partner will have to buy out the other, and the valuation of the company can be as contentious as the valuation of the partners' contribution to profitability. Perhaps this is really the best course of action for you, or perhaps the prospect of having you do so will persuade your partner to make some changes in your agreement.

However, as long as you continue doing business under the original understanding, and as long as each partner continues to contribute his best efforts to advancing the business according to what was originally demanded and expected, changes in the conditions of the partnership can be made only by mutual consent of the partners.

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About the Author

Rabbi Dr. Asher Meir is Research Director at the Business Ethics Center of Jerusalem (www.besr.org). He studied at Harvard, received a PhD in Economics from MIT, and rabbinic ordination from the Israeli Chief Rabbinate. Prior to moving to Israel, he worked at the Council of Economic Advisers in the Reagan administration. Rabbi Dr. Meir is also a Senior Lecturer in Economics at the Jerusalem College of Technology and has published several articles on business, economics and Jewish law. He is the author of the two-volume, "Meaning in Mitzvot (Feldheim), and his Aish.com columns form the basis of the "Jewish Ethicist" book (ktav.com).

I've been striving to get more into spirituality. But it seems that every time I make some progress, I find myself slipping right back to where I started. I'm getting discouraged and feel like a failure. Can you help?

The Aish Rabbi Replies:

Spiritual slumps are a natural part of spiritual growth. There is a cycle that people go through when at times they feel closer to God and at times more distant. In the words of the Kabbalists, it is "two steps forward and one step back." So although you feel you are slipping, know that this is a natural process. The main thing is to look at your overall progress (over months or years) and be able to see how far you've come!

This is actually God's ingenious way of motivating us further. The sages compare this to teaching a baby how to walk. When the parent is holding on, the baby shrieks with delight and is under the illusion that he knows how to walk. Yet suddenly, when the parent lets go, the child panics, wobbles and may even fall.

At such times when we feel spiritually "down," that is often because God is letting go, giving us the great gift of independence. In some ways, these are the times when we can actually grow the most. For if we can move ourselves just a little bit forward, we truly acquire a level of sanctity that is ours forever.

Here is a practical tool to help pull you out of the doldrums. The Sefer HaChinuch speaks about a great principle in spiritual growth: "The external awakens the internal." This means that although we may not experience immediate feelings of closeness to God, eventually, by continuing to conduct ourselves in such a manner, this physical behavior will have an impact on our spiritual selves and will help us succeed. (A similar idea is discussed by psychologists who say: "Smile and you will feel happy.")

That is the power of Torah commandments. Even if we may not feel like giving charity or praying at this particular moment, by having a "mitzvah" obligation to do so, we are in a framework to become inspired. At that point we can infuse that act of charity or prayer with all the meaning and lift it can provide. But if we'd wait until being inspired, we might be waiting a very long time.

May the Almighty bless you with the clarity to see your progress, and may you do so with joy.

In 1940, a boatload 1,600 Jewish immigrants fleeing Hitler's ovens was denied entry into the port of Haifa; the British deported them to the island of Mauritius. At the time, the British had acceded to Arab demands and restricted Jewish immigration into Palestine. The urgent plight of European Jewry generated an "illegal" immigration movement, but the British were vigilant in denying entry. Some ships, such as the Struma, sunk and their hundreds of passengers killed.

If you seize too much, you are left with nothing. If you take less, you may retain it (Rosh Hashanah 4b).

Sometimes our appetites are insatiable; more accurately, we act as though they were insatiable. The Midrash states that a person may never be satisfied. "If he has one hundred, he wants two hundred. If he gets two hundred, he wants four hundred" (Koheles Rabbah 1:34). How often have we seen people whose insatiable desire for material wealth resulted in their losing everything, much like the gambler whose constant urge to win results in total loss.

People's bodies are finite, and their actual needs are limited. The endless pursuit for more wealth than they can use is nothing more than an elusive belief that they can live forever (Psalms 49:10).

The one part of us which is indeed infinite is our neshamah (soul), which, being of Divine origin, can crave and achieve infinity and eternity, and such craving is characteristic of spiritual growth.

How strange that we tend to give the body much more than it can possibly handle, and the neshamah so much less than it needs!